We need to Talk about Lucid.

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later hey everyone kevin here so i'm

here with my father-in-law who's

watching the lucid air dream edition

which looks amazing as i walk up you

just told me about what happened on the

highway

uh going up to cupertino and back it

drove beautifully

we charged one time and passed

we're gonna give it a test i've never

done this before so we'll see how easy

it is and had lunch while we were doing

it it was it was just great

plenty of charging stations

the electrify america ones right the

electrifying americans powers were the

charging it went from

130 miles to 446 miles so that's pretty

awesome and it cost us zero

with lucid at least this model it came

with three years of free charging at

electrify america

so

considering the price of gas

going up to cupertino and back which is

about

330 miles each way

cost us zero yeah yeah now wait a minute

you did stop at charge point though for

like 20 minutes what happened with the

charge point charger so it's been

almost an hour of charging

and i now have 156 miles

whereas i started with

135 miles so it's basically

21 miles it has given me in almost an

hour of charging that is

really pitiful so i don't recommend

going to these

charging stations in shopping centers

unless you just need a quick thing just

to get you enough juice to get home be

careful of the charge point or other

stations because uh they charged at 6.5

kilowatts per hour and so i charged it

for like an hour they charged us 2.49

and it only gave us like 15 miles it was

it was ridiculous

uh that's like paying gas prices man who

wants to do that and also 15 miles for

an hour of charge whereas an hour of

charge at the electrify america's

stations gave us over 200 miles oh my

gosh so it does actually charge really

fast so fast so fast and that was at 150

kilowatts per hour and i understand they

have the stations that are 350 kilowatts

per hour which i understand that gives

you the 200

miles in about 15 minutes that's just

not oh my gosh it's just great charged

me 31

and second of all now there's this weird

humming noise that's coming i don't know

what it's from

hopefully it'll go away so what about

when you got it back because you had uh

what ended up being a software bug where

you couldn't turn the wheel it locked up

the steering and it made you really

concerned about what if that happened

while you were driving yeah what did

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they took it back they were absolutely

wonderful i gotta say they picked up the

car on a trailer bed and they they kept

it for a few days they said that they

did find like a software bug in the in

the steering thing that was correctable

and that it would never have been a

steering issue it was just upon startup

which that's when it did occur oh yeah

so it wouldn't happen while you were

driving it never happened and i said hey

listen would you trust your dad to drive

it you know that's me basically and or

your grandfather and they said

absolutely so

i trusted them and they brought it back

they

detailed it they brought it back on a

trailer

and

drove it up to cupertino and and it just

performed uh wonderful

and you said one of their engineers from

torrance actually came up to give the

car back to you yeah he happened to be

the one that delivered it and he

gave it his blessing and said it's just

an awesome card now let's talk a little

bit about the lucid valuation okay it's

been a while since we've talked about

the loose evaluation it's been quite a

while in fact the last time i talked

about lucid lucid was trading for about

35 dollars per share that is the last

time we pulled up the spreadsheet now i

have not modified this spreadsheet at

all

you can fact check me by going to my

last lucid video this is what i wrote uh

you know many months ago when when i did

this spreadsheet

and i suggested the following that there

was a downside miss risk

of the goal of trying to get to a

thousand deliveries in 2021 which we

know their goal ultimately was 560 they

ended up delivering somewhere around uh

in the mid 100s

by the end of the year they ended up

getting to my model number 214

by roughly january 20th so obviously

very very delayed here this is going to

substantially delay the forecast here

but i'm just going to leave this like

this for a moment because imagine if we

could get 150 000 lucids out by 2025

that's only in four years at 80 000 in

revenue per vehicle this spreadsheet we

have

looked at before

but i want to show something remarkable

here when we completed this spreadsheet

we projected that with a 20 margin that

is 20 profit on these 80 000 vehicles uh

80 000 vehicles

uh and a 100 times p e ratio in 2025

we would still

be sitting at just about 22 cents of

earnings per share

with unfortunately uh a a uh more

reasonable price by the end of 2025

around 21.53 that's not ideal right

because that's kind of where the darn

thing is trading at now and so at the

time we had recorded this video we

recognized this had a potential downside

of uh nine point two six percent for

five years every single year to get down

to that 21. now well now we're at 21.

okay so now let's go ahead and revise

this spreadsheet ourselves let's try to

be realistic here okay and i'm not

trying to sound like a bear let's just

be realistic with it all right so this

was whatever 150 doesn't really matter

2021 doesn't matter

i think we're gonna have a lot more of a

neo-style launch

which neo-style launch is gonna be going

more like hey it's gonna be a milestone

when we get to a thousand vehicles so if

we could honestly get to 8 000 vehicles

in 2022 and then maybe 20 000 vehicles

in 23

maybe we get to the full production of

2024

figures then we're going to need another

factory so massive capex expenses right

and that's going to have to ramp and

it's not going to ramp very quickly i

think we're probably more in the

neighborhood if if i'm being

you know a base case scenario here maybe

50 60 000 vehicles by 2025 let's let's

go with 60 okay let's just see what the

valuation looks like then we go to 60

000 vehicles in 2025 that's four years

out so we're gonna type in here four

years out

uh now we're at sixty thousand vehicles

let's assume that they have not gone to

their more mainstream vehicles yet and

they're still selling the premium

vehicles in the range of a hundred ten

thousand dollars so we're gonna bump

this revenue per vehicle right because

we're scaling back

how quickly we think they can actually

scale uh their production so we should

increase the average price per vehicle

given that right now they're selling

them for about 169 i'd say if we got to

about 60 000 vehicles in 2025 110k is

probably closer to where we'd be uh

where we would be i don't think we're

gonna get all the way down to that 80

000 per vehicle yet until we get into

the hundreds of thousands of vehicles

per year obviously we're going to leave

you know just zeros in here for other

things like energy insurance semis robo

taxi really because this is all more

like tesla related right we're trying to

compare this obviously to tesla which

makes sense uh we're going to use a 20

margin here

now

we might

might be able to bump this

so let's bump it let's go ahead and go

to where maybe neo sits right now which

is going to be closer to about a 23 cost

so let's go to 77 let's do that

and uh that's that's pretty much that's

going to be the big number right here so

77 percent will be the expense that

brings 23 percent of gross profit down

operating expenses uh

yeah probably 15

realistic i think very realistic here

and then after their tax rate they might

have some credits here and their

effective tax rates probably going to be

lower it's going to be more like 14 or

15 especially in the industry they're in

but we're still only going to be sitting

at about an eps around 16 cents a share

let's just get rid of this for a moment

here and uh

that's going to put us well at i suppose

we could leave it uh of uh well that

doesn't matter yeah so we take this 16

cents per share which i suppose if i

double click this

if i expand this i think it's a little

bit more yeah there it is it's 1596.

okay so about 16 cents a share

and with a future pe of about 100 it

brings us to a fair value of only about

16 bucks right however we could probably

bump the pe here

but now we're getting a little excessive

to try to justify where we are today i

think this is this is excessive so

unfortunately i do think that uh there's

still there's still risk here right

there's definitely risk in lucid now it

is a risk asset at 2362 which is about

where it is now it is a risk asset so if

if we do end up hitting some form of

bottom here

after this march 16th meeting it

wouldn't surprise me to see a little bit

of a movement to the upside you know i

could see it selling for around that 30

range but i do think that 2930 is going

to be a solid resistance for this

company until we really start proving

ourselves a little bit more that doesn't

necessarily mean that this valuation is

off it just means it's going to be

selling with a substantially higher

multiple right

but you can see here there's a lot of

pressure on this company's valuation

where it is now

until it can really prove that it can

ramp and right now we're really not

proving that the the other issues that

we have and i think this is probably

your biggest issue here is uh we you

know when we took delivery in january of

this vehicle we were told hey cruise

control within 30 days okay still no

cruise control right uh so here we have

169 000 car with no cruise control we

have lidar and we have all this these

cameras

but where is

our uh potential autonomous driving even

if it's mapped right even if it's chevy

cruze style or nvidia style or maybe an

apple partnership where is that

partnership where details on that and

for us to really justify tesla style

valuations we have to do two things one

we have to we have to prove to the

consumer that our software suite is

killer

we don't have that because lucid doesn't

have that partner and they're not

building it out in-house

and number two

we have to prove that we can scale

production which is the hardest thing to

do in manufacturing vehicles so as much

as i love the vehicle and i'm so happy

that they're really taking great care of

my father-in-law yeah they answer every

single question he has they've got some

great people uh there's a person who

works at lucid shout out to her winter

you're freaking amazing you have made my

father-in-law such a happy customer so

so important

valuation-wise though you know

you've got an uphill battle let's just

put it that way you know there's really

no no sense in playing with this because

the earnings are going to be so nominal

for so long

that this is you know this is one of

those stocks where diamond hands are

needed to be in it because you're going

to be on a ride again i do think there

could be an upside movement here in the

short term i think we'll still get

rejected at 30. i don't think we're

going to see some of these momentum

highs like we saw at rivien uh or or

lucid at any point in the near future

here uh so i certainly wouldn't be

buying call options on this you know if

i had shares i'd probably be selling

calls on on little rally days so for

example if we rallied up to 28 i'd be

selling calls against my position

but it's gonna be a bit it's gonna be a

minute uh for this uh to really get

moving so my thoughts hopefully that's

helpful for you

i'm finding that to be true really okay

and because initially after that

happened you were nervous about driving

to cupertino back because we're down in

socal back to ventura from beautiful

cupertino it's a beautiful day up here

and the lucid has 413 miles as far as

the range goes

so we'll see

how it lines up the trip back to ventura

is

313 miles

and and no issues

no issues whatsoever i even put that pad

in because i didn't want to load the

luggage on the stove

on the fabric yeah and and what just

happened with somebody on the highway

here they were driving a bmw next year

we're constantly

getting looks from people because it's a

unique color scheme and it's a different

looking car and it's new and people know

about lucids i guess from the internet

but um

i was driving along the freeway and a

bmw passed me on the left and the

passenger window went down and some

girls stuck her hand down and going yay

you know like that's amazing

okay

awesome awesome well it looks great

thanks for the update on the loosen

right

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